Posts filed under 'no exam'
I got a letter (bulk rate) from Garden State Life today. I had inquired some time back just to find out how bad their “no exam” life insurance offer was. I like to keep abreast of the hardly ever changing difference between what life insurance will cost if you take an exam and if you don’t.
They sent a sample check that could go to my beneficiary. They told me all the reasons I needed the insurance. The check was for the maximum amount available, $125,000, and they explained, “it’s a check that will have to last your family a long time, and cover a multitude of expenses…like the mortgage or rent, car payments, the monthly household bills, food, clothing, school…and everything else you now provide for them”. Since I estimate my current life insurance need at a million plus $, I was a little disappointed in the size of the check,
And if I buy it at “pre-birthday rates”, that $125,000 will only cost me $82.75 a month……AND that’s a guaranteed rate for 7 years, excuse me, “7 full years”. Well, what the heck am I thinking passing up an opportunity like that? OK, I know I’m just busting their chops because they make it real easy to buy overpriced life insurance, but really, if I don’t do it, who will?
REALITY CHECK!! For the convenience of not taking an exam here is all you get. 1. The convenience of not taking an exam.
That’s it. They still have the right to check the Medical Information Bureau and get medical records. They can still reject you if you answer yes to any of the health questions. So, what’s the deal with this exam they are getting you out of? Well, for that small amount most companies would have someone come to your home or business and get blood and urine specimens, check your height, weight and blood pressure and ask you all the same medical questions that Garden State does. Takes about 15 minutes and for most people it’s the only real good workup they get unless they’ve got insurance that will pay for annual physicals. AND IT’S FREE!!!!
So, what’s the deal if you do the exam? Most people get approved somewhere between preferred and standard rates. For the sake of comparison with Garden State we’ll use standard rates. Just to put standard in context, you can get standard if you are 5′10, 250#. You can get standard if your cholesterol is 300. You can get standard if you have well controlled type 2 diabetes. You can get standard with well controlled bipolar disorder. Standard is not that hard to get.
So, because on Garden State has a 7 year term insurance policy, I’ll compare it to a 10 year guaranteed level premium. Garden State is $82.75. Savings Bank Life is $45 a month and the guarantee is 3 years longer. For a 15 year guarantee it would be $60 a month and a 20 year guarantee would be just slightly more than the Garden State 7 year guarantee at $88 a month. And all of that is assuming you are only able to qualify for a standard rate.
Bottom line. Take the exam. Quick, painless, free and you probably need it anyway and…..you can save a ton on your life insurance. Don’t bite for the sake of convenience.
January 21st, 2010
I got an application in the mail yesterday from a Garden State Life It came with a (dang it) non-negotiable sample death benefit check and all of the emotional verbiage they could come up with in order to convince you to act now and don’t take time to check out the competition.
Their product is laughably called BudgetGard. They must be talking about the company budget because they get to save the cost of a life insurance exam and then turn around and provide you with a viciously overpriced and poorly guaranteed term insurance product.
Like our friends at AARP they seem to have embraced the logic of getting people into a term product with rate increases every 7 years that ends at age 80. While there is a conversion option that lasts to age 65, there isn’t any mention of what that product is or how huge the price is.
They mention in their compelling argument that “Some of those other term life plans you’ve seen elsewhere may require you to take and pass a rigid medical exam to qualify for coverage. Not so with BudgetGard. No medical exam is required!” So, what are you really gaining by not getting the free exam? A normal life insurance exam is done at no cost to you and consists of blood and urine specimens, a check of your height, weight and blood pressure and a review of your medical history.
Well, you have to answer all the medical questions for this company anyway, so that’s no big deal. If you check anything at all for health issues they have the right to obtain your medical records and everything in there is fair game for declining your coverage. Even if you say no to all the health questions they can still find information on you in the Medical Information Bureau (MIB). No exam is not code for guaranteed issue.
So, if you are moderately healthy you are far better off taking an exam that in most cases will get you better than standard rates. If you qualify for better than standard rates $100,000 of 10 year term at age 55 could cost you as little as $20 a month. If you were no better than standard it could cost you as much as $44 a month. This company’s price for $100,000 of 7 year term is $67 a month.
But here’s the real kicker. the company is underwriting you for one rate class, standard. If you are better than a standard risk you still get their standard rate. If you are worse than a standard risk they simply decline to offer coverage. If you take an exam you will get approved at the rate class you qualify for and if for some reason you don’t qualify for standard, traditional insurance offers higher rates so you can still get insurance. Here’s the other real kicker. Those higher than standard rates may very well be better than the company’s standard anyway.
Bottom line. There is no real advantage to “no exam life insurance”. It is an advertising ploy to make you feel like you’re getting away with something when the truth is that, best case, what you will get away with is a policy with terrible rates and terrible guarantees.
October 23rd, 2009
One of the little inconveniences of applying for life insurance is that, although free and done at your home or work, there is the need for an exam. With the exception of larger policies most exams consist of blood and urine specimens, a check of your height, weight and blood pressure and a lot of medical history questions. Generally we are talking about a 15-20 minute exam.
When I say “little” inconvenience, it really is. Most people don’t get regular exams and to get one for free, well, it’s cheaper than most health fairs and there is no requirement that you accept the insurance to get the exam results. I’m of course not advocating this as a way to get regular checkups at no cost, but if you’re applying for life insurance it is one of the perks.
The other “perk” if you will, compared to life insurance that doesn’t require an exam, is that a fully underwritten (meaning with an exam) policy is that you are eligible for better rates. When a company has more information about your current health such as that provided by lab results, they can feel confident enough to offer preferred plus rates. Life insurance that doesn’t require an exam is generally underwritten at standard rates. So what does that mean in real numbers and when should a person consider going the no exam route?
For instance, a 53 year male who wants $250,000 of 20 year term insurance policy and is in excellent health can go the no exam route and get that for $2355.00 annually. If they do an exam and qualify for the best rate class, not an unusual occurrence at that age, the same policy would cost $637.50.
Now at younger ages the ease of not taking an exam and doing everything over the phone and internet may be appealing. For instance, a 26 year old female can get a $100,000, 20 year term for $116.00 a year without an exam and if they take one the best they can do is $98 a year. At that age they probably don’t care about the medical value of an exam and for $18 a year difference, why not put a policy in force in 15 minutes and be done with it.
There is a misconception that if you apply for insurance with no exam somehow your medical condition and history is overlooked. Not true folks. They still ask medical questions on the application and they still have access to the medical information bureau and the ability to order your medical records to keep you on the honest side. The fact that they don’t have labs is absorbed by the higher rates.
Bottom line. There is a valid place for life insurance with no exam required, but the convenience should always be weighed carefully against the cost difference.
July 20th, 2009
With very few exceptions life insurance applications are accompanied by a physical exam and blood and urine tests. Occasionally the issue of a blood draw can complicate things with people whose veins are hard to find or those that are just plain freaked out by needles.
The two options that are available for someone who simply refuses to have blood drawn would be simplified issue life insurance (no exam), or in lieu of a blood draw which generates a couple of vials of blood to be tested, a few companies will allow a “finger stick” which generates far less blood and narrows what the company can test for simply due to volume.
First let’s put this in perspective by using a sample client. A man in his early 50’s. Trying to quit but still actively smoking. Good health and family history. He just had a horrible experience with a blood draw when he had shoulder surgery a few years back. If we did a full exam and blood draw his price for $250,000 of 15 year term insurance would be about $1500 annually.
To go with simplified issue insurance where there is no exam and no blood or urine specimens, the best price on the same amount and term length would be $3892 annually. Taking this course of action to avoid giving blood would cost about $2400 more per year for 15 years. I don’t know, but I’m thinking I could figure out some way to give blood to save $36,000 over the life of the policy.
The other option, the finger stick, will generally not be allowed for preferred rates, so in this case the person would be looking at standard smoker rates and the best of those with a company that will accept a finger stick would run $2600 annually, an additional $16,500 over the life of the policy.
So, what does a company lose by not doing a finger stick versus a full blood draw? One of the losses is a lipid panel, cholesterol, triglycerides, hdl, ldl, etc. They are also lacking the blood it takes to run liver and kidney function tests. No PSA test. That is a lot of health information that the insurance company is going to forgo a glance at, and the less information they have to help determine potential mortality, the higher the price. Obviously with a simplified issue policy there are no tests and not even an examiner who gets to look you over, so the company is assuming risk without full information (remember Reagan, “trust, but verify”), so again an even higher price.
One option that can occasionally save the day is that those who are hard blood draws and are scared to just let any old nurse working for an exam company do it, may have a favorite nurse at their doctor’s office who can get the blood on behalf of the exam company. There are some guidelines that have to be followed, but sometimes it works.
Bottom line. The best rates for life insurance come with the best, and most, possible information for the insurance company to scrutinize. A few tips for those that have a hard time giving blood. Drink more water than usual in the 12 hours leading up to the exam and, if you’re up for it, do some push ups right before the blood draw.
November 25th, 2008
We all see advertising on a regular basis offering life insurance without an exam. I can tell you personally I am not a big fan of having blood drawn and peeing in cups either, so I understand the appeal.
What they obviously aren’t going to share with you is the cost of convenience. They also don’t make it very clear that, opposite of most people’s assumption, just because they don’t draw blood doesn’t mean they aren’t going to investigate your health.
First let’s address the cost of convenience. Just to keep things apples for apples I am going to quote the same amount of insurance and term length with a company that offers insurance with and without exams. For this example we will use Liberty Life.
For this example we will assume a 40 year old male in great health. Just hates the hassle of an exam (they aren’t really a hassle by the way). If he gets a simplified issue (no exam) policy for $250,000 of 20 year term insurance it will cost $775 annually. If he gets the same amount with a fully underwritten (exam) policy it will cost $365 annually. So, the cost of convenience is $410 per year for 20 years, $8200 just so he didn’t have to pee in a cup.
As to the other issue. A lot of people assume that no exam means the company doesn’t care about your health. Nothing could be further from the truth. We’ve already seen that they are concerned enough to hedge their bet by more than doubling your rates. They are also going to check with the medical information bureau to see if there is any health issue that maybe you haven’t shared with them. They also reserve the right to obtain medical records. They want your business, but they’re not being stupid about it. They will decline you at the slightest bit of discomfort about your mortality risk.
Bottom line. If it sounds too easy, it’s going to cost you. If you see it as a loophole, it’s likely to snap shut on you. Suck it up and do the exam.
May 22nd, 2008
